6. Improving products helps a firm gain or at least retain ______ in the face of competition
Market share
Profit
Revenue
7. Which of these is NOT an example of X inefficiency?
Technical economies of scale
Employ surplus labour
Adopt inefficient managerial practices
8. What is X inefficiency?
X inefficiency occurs when there is little incentive for firms to want to be efficient.
X inefficiency occurs when a firm uses more inputs than are necessary for a given level of output. Associated with lack of competition e.g. within a monopoly
X inefficiency occurs when a market fails to deliver the amount of products and services most wanted by consumers
9. What is dynamic efficiency?
Dynamic efficiency is improvements in products, processes and productivity over time by exploiting economies of scale or successful investment in research and development. In short, efficiency over time.
Dynamic efficiency is the creative work undertaken to apply scientific and technological innovations to products and processes.
10. Where does allocative efficiency occur?
AR=AC
P=MC
AC=MC
11. Where does productive efficiency occur?
AC=MC
P=MC
AR=MC
12. What is productive efficiency?
Productive efficiency is where firms are maximising output from given inputs.
Productive efficiency is when scarce resources are used in a way that maximises consumer satisfaction.
Productive efficiency is where firms are operating at the lowest point on the MR curve
13. What is allocative efficiency?
Allocative efficiency is where firms are achieving economic efficiency
Allocative efficiency is when scarce resources are used in a way that maximises consumer satisfaction.
Allocative efficiency is where firms are maximising output from given inputs.
14. What is true of allocative efficiency?
The price paid by the consumer represents the true cost of producing the last unit
The price paid by the consumer represents the lowest cost of producing the last unit
The price paid by the consumer represents the price the supplier is willing to sell for
